First Rental Property

Hi Everyone,

I hope that you are all doing well.  First off, I would like to say, thank you to all of you who have recently submitted guest blog requests over the past several weeks.  There have been so many requests recently that I have a back log of guest posts to publish.  I will be publishing these posts in the coming weeks.

Also, because there has been such a demand for guest bloggers, I will not be accepting any more requests until later on in the year. Thank you SO much for your interest!  Once I am ready to accept guest blogs again later in the year, I will make the announcement through a future blog post!

Now on to business….

Today’s date is August 4th 2012.

If you own a rental property, and if your rent was not paid on time, you need to take action if you have not done so already.  You need to  prepare the necessary paperwork required in order to notify your tenant of their ‘non payment of rent‘.

In Ontario, Canada where I am, the paper work that you prepare in the event of non payment of rent is called the N4.  I have no idea why the call it an N4 here.  It is such a weird name.  So weird, the form name was once mistaken for a type of gun!  🙂

You should know that novice real estate investors fall into the following trap…

Often times when the rent has not been paid by their tenant, they are given an explanation by their tenant as to why the rent was not paid on time.

In many cases, the novice real estate investor then delays in submitting the necessary paperwork notifying the Landlord and Tenant Governing body in their area of the non payment of rent.

This is a very common mistake that novice real estate investors make.

You must never delay in submitting this paperwork!

…But

There is always a BUT…

New real estate investors will make this mistake time and time again.  I see it all the time.

I do not blame the ‘newbies’ because I have also made this mistake myself.  I have delayed and delayed and delayed submitting paperwork because I was repeatedly told by a tenant that the rent is going to be paid.

Well, my real estate investing friends, I want you to know that you cannot delay in submitting this paperwork.  If you do, the process will eat you alive.  In many jurisdictions, legislation is in favour of the tenant.  As such, as a landlord, if you delay in submitting paperwork, you are doing a disservice to yourself.

No matter what, if a tenant is late in paying their rent, you have to file the initial paper work notifying the tenant of their ‘non payment of rent’

Don’t FREAK out!

New real estate investors always freak out when a tenant does not pay rent.  They also freak out about the paperwork and about WHEN they are supposed to submit the paper work.

When is the right time to submit the paperwork?

Not knowing the answer to this questions literally kills a lot of novice investors.  They have no idea when they are actually supposed to submit their paper work to their tenant and to the governing body.

The RIGHT answer!

The right answer is that you should submit your paper work notifying the tenant and the governing body of the non payment of rent as soon as you are allowed.  That means, that you always submit the paperwork on….

The 2nd of the Month

What Most people do…

What most people do, and when I say ‘people’, I am referring to experienced real estate investors.  What they do in reality is NOT submit their paperwork on the 2nd of the month.  This is a generalization as I am sure that some actually submit their paperwork on the 2nd.  However, most people don’t submit on the 2nd.

Why don’t people submit on the 2nd

People don’t submit on the 2nd of the month for a number of reasons.

-some people are lazy

-some people don’t know the rules surrounding how to deal with non payment of rent

-some people like to give their tenants some extra time to pay the rent

Which day do you become a real estate wimp?

You become a real estate wimp if you do not submit your paperwork by the 5th of the month.  This is already too late, however, in my books, it is the absolute LAST day to submit the paper work to your tenant.  There is absolutely NO reason why you should be delaying any further past the 5th of the month.  If you do, you are asking for trouble.  If you tenant has decided not to pay you rent again, or is unable to pay you rent, you need to begin the eviction process.  Waiting, staling, hoping is going to do you no good.  You have to take action and submit your paperwork on this day, or BEFORE!

How do I know this?

Believe it or not, but I once waited over 4 months before submitting paperwork to notify the tenant and the governing body of their non payment of rent.  This was a huge error of judgement on my end.  A huge error of judgement that almost cost me a little over $5000 in unpaid rent.  Fortunately, I was able to recover the rent at a later date.  However, I came VERY close to losing out on $5000 in rent just because I was not following the process.  I almost lost $5000 in rent because I was a real estate investing wimp!

What I learned

I learned to never again be a real estate investing wimp.  I learned that NO MATTER WHAT, if rent is not paid on the 1st of the month, the ‘notice of non payment’ must go out by the very latest by the 5th of the month.  (The 5th of the month is my personal preference, currently.)

Bottom Line

You got into this business or are looking to get into the businsss of real estate investing because you are not a WIMP!  You are willing to take risks that other people are not willing to take.  Real Estate investing in full of risks and rewards.  You must learn very early on to manage the risk that you are exposed to.  The only way to manage the risk of a tenant not paying, or not paying on time, is to file the necessary paperwork with your governing body as soon as the rent is not paid.

Don’t be a wimp.  If you are a wimp, you may very well lose lots of money in  rent and be wiped out of this businesses due to your inaction.

Best Regards,

Neil Uttamsingh

ps: All real estate investors need support, whether you are new or experienced.  To learn step by step guidelines on how to deal with non paying tenants, read my post on how the Real Estate Investment Network can help you!

Every real estate investor has a TSN Turning Point. If you are Canadian, and if you are a sports fan, you may know what I am referring to when I say, ‘TSN Turning Point‘.

If you have no idea what I am talking about, not to worry.

Here is what I mean…

For many years TSN had been Canada’s leading sports network.

After each televised sports game on this network, the sports commentators covering the game would review the highlights of the game as well as what they called the ‘TSN Turning Point’.

The TSN Turning Point was the time in the game where the momentum shifted for the winning team.  It was a time in which the winning team took stride.

It was a point in which the winning team made a key play that helped them win the game.

All Real Estate Investors Have A TSN Turning Point

Every experienced real estate investor can tell you when their own personal TSN Turning Point occurred.

A TSN Turning point for a real estate investor is a time in which they gained momentum, confidence, and belief in themselves.

For myself and many other real estate investors that I know, The Real Estate Investment Network ACRE Event was The TSN Turning Point.

Today I have a treat for you. The Real Estate Investment Network and Don R. Campbell have a guest post for you. In the post Don and the Real Estate Investment Network refer to the real estate investing space in Canada as well as the upcoming Toronto REIN ACRES Event.

Enjoy the post and feel free to leave your comments for Don in the comments section below.

Best Regards,
Neil Uttamsingh

ps: Don’t forget to subscribe to my blog if you are a new to the world of real estate investing. You will find very valuable information on this blog that will help you to buy your first rental property.

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A Canadian
Real Estate Market

Doesn’t Exist in 2011,

So Don’t Be Fooled

What does 2011 hold for
Canadian Homeowners and Real Estate Investors?

Almost a quarter of the way into the new year, many
people are still looking for ‘predictions’ of what 2011 will hold. That’s why
you see so many pundits come out of the woodwork to share their insights. I do
find this a bit strange as nothing about the market really changed from December
2010 to January 2011 and through to March 2011, other than a few new pictures on
your kitchen calendar. Those who pay close attention to the underlying economic
fundamentals aren’t struggling with what is coming next.

But having said that, let’s take a look at what the next 12 to 18 months hold
for Canadian real estate.

Quick 2010 Overview – Multiple Levels of Confusion

In order to look forward, we do need a quick review of
2010. The year in real estate turned out to be exactly as predicted in January
2010. It was a year of turmoil and confusion (the big economic ‘W’) and those
who were unaware that we were riding this 2010 ‘W’ allowed themselves to be
shaken out of the market (right at the wrong time!)

The economic ‘W’ does have a real cleansing effect on the market as it always
chases out most of the speculators (those who profit only when market values
increase dramatically) and leaves the market to the real professional investors
and landlords.

This confusion was especially felt by those using housing market numbers to
analyze the market. Investors understand that:

If You Are Making Decision based
on Housing Market Numbers

… You are Driving By, Looking In The Rear-view Mirror, and are Bound To Crash!

Government Meddling Led To
Unsustainable Mini-Boom

More confusion was thrown into two very large markets
(BC and Ontario) with the announcement of the HST. Despite some limited efforts
by both provincial governments, how the HST was going to affect real estate
purchases and sales was not clear – into this vacuum sped confusion and an
almost breathless panic to get purchases done before July 1st. This caused a
higher percentage of purchases to be pushed into the first half of the year than
would normally be expected. Due to their sizes, these two markets hold such a
high percentage of the Canadian real estate transactions that this activity made
the Canadian average price and activity jump despite most other markets
underperforming.

This cursory analysis led some housing analysts to predict that a bubble was
forming. This, of course, turned out to be false as markets slowed down again
later in the year. Those of us who analyze the real estate market by looking at
underlying economic conditions knew this boom would be short lived and was a
product of desperation rather than true market sentiments.

A ‘Canadian’ Real Estate Market Does Not Exist

Overall, 2010 proved to investors and homeowners alike
that a ‘Canadian’ real estate market doesn’t exist in and of itself. The
Canadian real estate market is actually a series of very regional markets all
which perform relatively exclusive of each other.

In fact, in 2010 and in 2011 the market really will be a ‘Goldilocks’ story.
Some markets will be too hot (compared to underlying economics), others will be
too cold, and some will perform just right. As our regions continue to detach
from each other economically this trend will continue for many years to come and
will compel investors and homeowners to ignore national real estate numbers and
trends. They must focus on what is happening in their region.

2011 Market Predictions

To make it easier to predict what is going to occur in their
local real estate markets, investors can use the formula shown below. Long term
increasing prices of real estate stem from economic (GDP) growth. Without
economic growth, a real estate market is not sustainable. Sure there can be
upward and downward blips not attributed to economic growth (such as when the
governments meddle as in 2010), but these are just short-term unsupported blips.

Figure: The Long Term Real
Estate Formula

GDP Growth = Job Growth = (12 months later) Population
Growth = Increased Rental Demand = Decreased Vacancies = Increased Rents = (18
months later) Property Purchase Demand = Increase in Property Prices

This cycle works both ways, over roughly the same time lines. Sustainable real
estate price increases occur approximately 18 months after a region’s economy
begins to grow and they drop approximately 18 months after the economy in a
region begins to shrink.

We can use Alberta’s markets as the perfect illustration of this formula in
action. Alberta’s GDP grew so quickly for years in a row and the real estate
markets skyrocketed over that time and even after the economy began to slow
down. This set up a number of high expectations and assumptions by people not
understanding this formula and scared a lot of people out of the market. Even
today, despite the fact that Alberta is going to lead the nation in economic
growth in 2011, those who experienced the 20% annual increases in the past are
sitting on the sidelines waiting for the market to come back. Smart investors
who understand the inevitability of this formula are quietly picking up pieces
of Alberta cash-flowing real estate, positioning themselves for the inevitable
increase in demand 12 to 18 months from the start of the strong economic growth.

Because Canada’s 2011 market is going to be even more regionally fractured than
in 2010, it is imperative that investors and homeowners understand this formula
and they make their investment decisions based on it, rather than the
fluctuating housing market numbers.

CREA & Competition Bureau
Settlement Leads to Unintended Consequences in 2011

As with any structural changes to an industry, the settlement
imposed by the Competition Bureau on Canadian Real Estate Association’s MLS
website will have many unintended consequences on the health of the Canadian
real estate market. We are currently completing a full report and analysis of
these consequences (some of which are OK and some of which are not good news).
Here are some preliminary conclusions that will affect the overall market:

1. Housing metrics will indicate incorrect readings of the
   health of the market, leading to inaccurate analysis by some market
   commentators during the year
2. Often used metrics such as ‘sales to listings ratio’,
   ‘days on market’, and ‘overall number of listings’ will be impossible to use
   as comparisons to previous year’s performance. This is because under the new
   rules, there will be many more listings being posted by people just fishing
   the market at very little cost (many poorly priced, poorly managed listings
   left in the system too long).
3. These additional listings will lead to average price
   increases being softened more than the underlying economics would usually
   lead to.

The complete Unintended Consequences of the CREA
Settlement with the Competition Bureau report will be publically distributed to
all who are subscribed to
www.myREINspace.com.

Finally, the distinction between real estate “investors” and real estate
“speculators” is created by one thing – a sound and unbiased education in real
estate fundamentals. Done properly, real estate investing produces results in
any market conditions because it incorporates economic fundamentals, proven
business practices, and a long-term vision. On the other hand, real estate
speculation requires perfect timing, lots of hope, and a strong enough stomach
to ride out the cycles in the market!

By far the quickest, least expensive and most engaging way to become a
sophisticated real estate investor is to set April 16th and 17th aside to attend
the

2011 Toronto ACRE™ Live event. Now in it’s 19th year, the ACRE™ system
continues to be where Canadians go to receive an unbiased real estate investing
education that works – not because if focuses on the “Canadian” market, but
because it teaches investors to drill down into the economic fundamentals that
drive regional real estate markets.

Hi Everyone,

I hope you are all doing well.

It has been quite some time indeed since my last installment of my Business Life Story.  It has been so long that many of you probably don’t remember the previous posts, or have not been subscribed long enough to receive them.

Fortunately, I am able to share all installments with you, with just a simple click of your mouse, you can relive my ‘story’ by checking out the previous installments below.  By reading through the articles, you can learn how I became a real estate investor, and learn about the path that I took in order to get to where I am today.

Business Life Story Part One

Business Life Story Part Two

Business Life Story Part Three

Business Life Story Part Four

Business Life Story Part Five

Business Life Story Part Six

In the Business Life Story Part Six, I discussed the first 2 property purchases.  In this installment, I am going to describe the remainder of the property purchases.

After my second property purchase in October 2008, I went on to buy 3 more properties between October 2008 until August 2010.

At the time of writing, it is November 12th 2010 and I own 5 rental properties in total.

The three properties that I purchased between October 2008 and August 2010 have all been located in Hamilton, Ontario Canada.

The fact that I purchased these properties in this particular market had a lot to do with the education I received from my real estate investment group, which is called The Real Estate Investment Network, more affectionately referred to by it’s members as REIN.

My association with REIN allowed me to and continually allows me to meet very smart entrepreneurs, business owners, and savvy real estate investors.  Many of these people have helped in making me smarter.  I have become smarter as an investor simply by observing what other more successful people are doing and trying to recreate what they are doing to the best of my ability.

My three Hamilton properties are all generating positive monthly cash flow.  To the novice investor this means that with the monthly rent that I collect, I am able to pay for all of the monthly expenses and still have some money left over as my profit each month. The fact that I could buy these properties in Hamilton and cash flow them monthly was a big selling feature which resulted in me buying these properties.

A number of years ago, Hamilton was identified as a region in Ontario with a very bright future.  Jobs are being created in this area, and where there is job growth, real estate values are always effected in a positive manner.

My plans are to continue to grow my portfolio of rental properties.  I am keeping a careful eye on the management of these properties.  I am always looking to move forward and acquire more properties by partnering up with the right joint venture partner.

As I have mentioned in previous posts, it is good to exercise extreme due diligence when selecting joint venture partners.

Through my association with REIN and after meeting a large number of real estate investors, I began to notice that a good number of these members had different types of products and services related to real estate that they sold.

Some people were Realtors, some people offered real estate services at a cost, and some people sold real estate informational products.

Watching all these people essentially ‘monetize’ real estate products and services really got me thinking as to how I could do this myself.

After some careful thought and some research on my end, I decided that I would establish my own real estate blog.  It was at this time that First Rental Property was born!

Picking the focus for the blog was easy for me.  I have always been genuinely interested in helping other people.  Therefore the theme of providing knowledge and confidence to new and aspiring real estate investors made complete sense to me.  I knew that this was a topic that I could write about with great ease.

Although my intent was to monetize First Rental Property from day one, I have yet to do so.  The blog has been in existence for about one year now and I have not generated any revenue from the blog.

I have enjoyed building a large readership, however, the monetization of the blog has always been the plan.  As the blog continues to grow, I will be incorporating different monetization strategies into the blog.

The Future

As far as the future is concerned, I plan to continue to actively manage my real estate portfolio. I will continue to acquire more properties with  joint venture partners, and continue to produce quality content for First Rental Property, as well as to incorporate monetization strategies as the blog continues to develop.

Best Regards,

Neil Uttamsingh

PS: To keep up to date with my blog, enter your e-mail address on the LEFT hand side of the blog.  To receive The First Rental Property Newsletter, enter your e-mail address on the RIGHT hand side of the blog.  In the newsletter experienced real estate investors will share with you tips and tricks on how to buy your first rental property.

Hi Everyone,

I hope you are doing well.

This past weekend, Ron LeGrand was in Toronto presenting to members of Don R. Campbell’s Real Estate Investment Network (REIN).

For those of you that do not know, Ron LeGrand is renowned in North America as a real estate expert and lecturer who has taught thousands of people how to earn big incomes through his ‘quick turn’ real estate strategy.

In Ron’s ‘quick turn’ real estate strategy, personal income and credit is not used when buying and selling properties.

Ron has personally bought and sold more than 1,600 homes and is known as the “Guru” of quick turn real estate.

Ron, also known as the “millionaire maker” has taught more than 250,000 students how to be a Quick Turn Real Estate Millionaire.

I am a member of The Real Estate Investment Network (REIN). At our member events, I often help out where ever I can.

After Ron had finished presenting this weekend at our member event, myself and a fellow REIN member and friend got the opportunity to drive Ron back to the Airport so that he could catch his flight back to the USA.

Our member event was being held about 5 minutes away from the Pearson International Airport in Toronto, and we were driving Ron directly to the Airport.

I took these 5 minutes to ask Ron the most intelligent questions I could think of. I always take full advantage of asking successful people questions, in order to gain an insight into how they view things.

Here is what I asked Ron:

Neil: “Ron, in your years of presenting to students all across North America, what do you feel has been the commonality between the students that have become successful with the Quick Turn strategies?”

Ron LeGrand: “They have been committed.  They weren’t just there (in the class) to collect information.”

Further, I told Ron that Don R. Campbell of The Real Estate Investment Network, has a great quote.  I told Ron that the quote is, “The most successful people do not wait for all of the lights to turn green before taking action.”

Ron commented that he liked that quote and gave a quote of his own.  His quote was something to the effect of, “80% of America’s CEOs have made crucial decisions with only 20% of the information”

So what does this all mean to you?

If you are an new real estate investor, there are a couple of big take aways for you from my discussion with Ron.  The first take away is…

• In order to become successful, you have to be committed.  As Ron said, the most successful students that he had were all committed, and they were not just there to collect information.  Listen to Ron and stay committed!

The second big take away is a little less obvious, however, equally as important.

• As the wise Philip McKernan says, ‘In the absence of clarity, take action.”  This is the exact same message that Ron is conveying.  The most successful people in the world became this way because they had to often make important decisions when they did not have all of the necessary information.  The point is that they did not wait for this information and for complete clarity.  They pulled the trigger, took the leap of faith, and took action…even when they were not certain what the result would be of their actions

Best Regards,

Neil Uttamsingh

PS: To keep up to date with my blog, enter your e-mail address on the LEFT hand side of the blog.  To receive The First Rental Property Newsletter, enter your e-mail address on the RIGHT hand side of the blog.  In the Newsletter, experienced real estate investors will share with you how they purchased their first rental property.  They will also share with you ‘tips’ and ‘tricks’ to help you buy your first rental property.

Hi Everyone,

I hope that you are all doing well.

In the early days of my blog, I talked about what transitional areas were.

Over the years I have noticed a handful of people do exceptionally well by investing in transitional areas.

A few of these people were not real estate investors in the traditional sense.  Rather, they were people that saw opportunity in a market that was changing.

As you can read from my previous post on transitional areas, these small pockets in the market, that are going through or have gone through tremendous change.

Pride of ownership has increased in these areas, and these are areas that people want to move to.

• If we look at transitional areas as a real estate investment strategy…you can really win BIG with this strategy.

Investing ‘early’ in transitional areas will contribute to you getting the biggest payout down the road…

For example, if you are looking to buy your first rental property, you can consider buying this property in a transitional area. The benefits of doing this would be:

• Property values will increase (because it is a transitional area)
• You will have a great exit strategy, as you will be able to sell your property at a time in which the area is much improved.

As mentioned above, due to the fact that transitional areas area going through significant change (for the better), property values increase in these areas.

As an example, I purchased a property in a transitional area of Toronto in October 2008.
I had done my homework, as I researched this area thoroughly. As well, I studied the research conducted by extremely reputable sources such as Don R. Campbell’s Real Estate Investment Network.

(Oh and by the way, Don has one of the best Canadian real estate blogs.  Check out Don R. Campbell’s Blog.)

After conducting all of my research in this area, I knew that I would realize some good appreciation with this property.

This property, is located in a new development and is scheduled for completion in the middle of 2011.  I estimate the market value of this property to be $40,000 to $70,000 higher than what I paid for it in October 2008.

In my view, this was not speculation, rather a well thought out purchase in an area going through significant revitalization.

As you can see from the example above, if you adopt a strategy in which you are buying your first rental property in an area of transition, you can win big with equity appreciation.

In fact, why stop there?

Why not adopt a strategy of buying your first, second, third rental property all in transitional areas?  Within a matter of years, you will have created a significant amount of equity.

Happy Investing!

Best Regards,

Neil Uttamsingh

PS: To keep up to date with my blog, enter your e-mail address on the LEFT hand side of the blog.  To receive The First Rental Property Newsletter, enter your e-mail address on the RIGHT hand side of the blog.  In the Newsletter, experienced real estate investors will share with you how they bought their first rental property.  They will also share with you some tips and tricks to help you get started!